Working as a federal contractor can be a very rewarding and lucrative experience, but it comes with the responsibility of ensuring that you comply with a broad range of regulations.
Companies that obtain government contracts are required to agree to the rules established by the government to protect the public interest and treasury.
Some practices that are acceptable within the commercial marketplace, such as treating a customer to dinner, are not acceptable in the federal government marketplace.
Government contractors must remain fully compliant to keep their contract and compete for future contracts. Although navigating these complex regulations can seem overwhelming at first, contractors will become accustomed to the regulations the more they work with the government and can seek the assistance of government contract consultants to ensure compliance.
Areas of Compliance
In addition to the specific areas of government compliance outlined below, some government terms are placed on all contractors who meet certain criteria.
For example, federal contractors who do more than $10,000 of business with the government per year are not allowed to discriminate against employees on account of their race, religion, nationality, or sex. They must also take affirmative action.
Other regulations may apply, and contractors are responsible for ensuring that they understand and follow the specific areas of compliance associated with their contract.
Cost Accounting Standards (CAS)
The Cost Accounting Standards, or CAS, are aimed at promoting consistency and uniformity in cost accounting. Some contractors must fully follow all 19 CAS standards. Others fall under modified CAS coverage, which only includes four of these standards, and some contractors are exempt from CAS.
For contracts that must adhere to CAS, a key component of compliance is submitting a Disclosure Statement to the Administrative Contracting Officer documenting their cost accounting processes. It includes general information, direct and indirect costs, depreciation, capitalization, and other credits and costs.
Code of Federal Regulations (CFR)
The Code of Federal Regulations, or CFR, encompasses the general and permanent rules that are published in the Federal Register by the federal government’s agencies and executive departments.
It contains 50 titles corresponding to broad areas of federal regulation. Title 48 of the CFR contains the regulations related to government procurement within the United States.
Defense Contract Audit Agency (DCAA)
The Defense Contract Audit Agency, or DCAA, is a governmental agency in charge of performing audits to ensure that government contractors are complying with federal regulations related to proper financial management. They perform all audits for the Department of Defense as well as some non-DoD government agencies.
Defense Federal Acquisition Regulation Supplement (DFARS)
The Defense Federal Acquisition Regulation Supplement, or DFARS, specifies the requirements surrounding unclassified information that contractors working on DoD contracts must adhere to with their information systems.
Its core requirements consist of 14 control families including areas such as access control, identification and authentication, media protection, risk assessment, incident response, and system and communications protection.
Department of Defense (DoD)
The Department of Defense (DoD) is one of the most stringent departments for government contracting because it involves the lives of those protecting the country. Timekeeping and using a DCAA-compliant accounting system are two of the most crucial compliance components for DoD contractors.
General Services Administration (GSA)
The General Services Administration, or GSA, is the purchasing department of the United States government. It lists the contracts and schedules for which vendors can bid.
GSA compliance is assessed across a broad range of categories, including scope compliance, invoicing requirements, labor qualification compliance, and other factors.
Federal Acquisition Regulation (FAR)
The Federal Acquisition Regulation, or FAR, is a system of uniform policies and procedures aimed at ensuring the government’s purchasing procedures are standard and consistent and are being applied in an impartial manner.
FAR governs contracts with agencies that are under the executive branch’s oversight, making it applicable to federal prime contracts and subcontracts under federal prime contracts.
Why Is Compliance So Important?
Contractors who fail to provide services or goods on time, demonstrate progress, or satisfy any of the contract’s provisions could see their contract terminated.
In some circumstances, agencies might allow contractors time to improve their performance issues and become compliant prior to cancelling their contract.
Violating the compliance rules can lead to financial and contractual harm. Contractors who fail to comply with the applicable regulations might also face civil monetary penalties or criminal sanctions.
Unlike many commercial contracts, the government has the right to terminate contracts and make unilateral changes as they see fit, although contractors do have some degree of protection.
Reach Out to The Government Contract Compliance Experts
If you are an existing or aspiring contractor who wants to ensure you are adhering to all of the regulations and requirements that apply to your government contracting work, reach out to the government contracting consultants at Diener & Associates.
Their experienced and dedicated team can share their knowledge and help you manage risk to place you in the best position for federal contracting success.